When the pandemic first started, and shortly after the initial shock, there was an overall sense of optimism. Companies started innovating at impressive rates. For example, many Michelin-starred restaurants began adopting the takeaway trend, something they would not have considered under normal circumstances, and found that it worked impeccably. Universities embraced digital learning and found that it created endless opportunities to innovate in education. Digital learning might have even solved, in a way, inequality challenges in our society. Education can now become accessible to students even in rural areas. Companies, on the other hand, adopted working from home and found that employees in general were more productive.
The crisis was accelerating innovation. In fact, in some cases companies told us that innovation had accelerated by decades. What many companies were not bold enough to try before now had no option but to adopt because of the extreme situation they suddenly found themselves in.
But there’s a catch. While some sectors were innovating, many others, if not the majority, were struggling. In fact, the International Innovation Barometer report pointed that more than 31% of companies failed to innovate during the crisis.
Not only that, but the sectors that innovated were mostly doing it for survival and not for growth, like in prosperous times. Historically, most ground-breaking innovations blossom during times of prosperity.
There’s another worrying trend as well: During times of crisis, startups are much more likely to struggle than larger firms. In 2020, 47% of entrepreneurs saw less Venture Capital interest, availability or reactiveness, and analysis by OECD (Organisation for Economic Co-operation and Development) shows that business registrations dropped significantly. The results? Long-term effects on employment and innovation. The most promising startups are often taken over by larger corporations. So now we have a few large corporations that control the majority of the business world. Besides the obvious downturns of such a system, research has constantly shown that startups bought out by corporations experience a dire decline in innovation.
The crisis has accentuated inequalities
Going back to the example of universities, education has perhaps become more accessible, but that is only the case for a certain layer of society. The crisis has aggravated existing inequalities. Take Cindy, an American entrepreneur I spoke with for another research… She’s a mother of three, from a poor neighbourhood, who decided to pursue her education at 30 just before the pandemic hit. While she was excelling at university while running her own business, she now found herself unable to continue her education. She only had one computer and one smartphone at home, and those were dedicated to accompanying her children’s education. In fact, two thirds of school-age children and young people do not have access to internet at home worldwide. So no, education has not become more accessible.
The crisis has accentuated inequalities between men and women as well. According to a study by McKinsey&Company, women’s jobs are 1.8 times more vulnerable to this crisis than men’s.
Moreover, innovation has struggled due to the work from home reality. Many innovations kick off around the water cooler in the company’s kitchen. Innovation is mostly about the culture. Research has constantly pointed towards the role of serendipity in creating creative interactions that lead to innovation. So yes, perhaps employees are more productive, but the beauty of serendipity is entirely lost on Teams or Zoom.
A crisis of this scale is an opportunity to rethink innovation.
Is it all doom and gloom? Not really. In fact, it is what we make of it. In the impact paper I co-wrote as part of ESCP Business School’s “Better Business: Creating Sustainable Value” series, we argue that a crisis of this scale is an opportunity to rethink innovation. Many times, innovation does not take into account the consequences on our lives, on our society, on our planet. Investors are keen on funding certain technologies because they are trendy, but it is extremely rare that founders sit together with investors to reflect upon the impact the technology might have in the long run. The short-term thinking has often led to extreme crises, like the climate situation.
Perhaps a crisis of this scale is an opportunity to rethink where our efforts go, and to integrate social and environmental issues into innovation, without it necessary falling under the umbrella of social innovations. Perhaps this is our opportunity to learn that our existing ways are not sustainable anymore. Innovation can play a pivotal role in preventing future crises of this scale, promoting equality, and contributing to a better world.
The views expressed in this article are those of the author and not the position of ESCP Business School.